Having a net worth over $40 billion may command some authority and attention for one’s views on economics and taxation. But it should not buy one an exemption from basic logic, intellectual integrity, or consistency.

Such seems to be case with Warren Buffett, who yet again took to the op/ed pages of the New York Times this week to call for higher taxes on citizens earning more than $500,000. The idea that higher income people should pay more in taxes, whether born of a desire for greater progressivity and/or a desire to raise more revenue, is certainly a legitimate viewpoint. However, any serious person espousing such an argument should be expected to address several basic questions: What will the standard of fairness be? How is it to be determined that any particular income group is paying its “fair share?” And if taxes are to increase, whether to address the deficit or for “fairness,” what degree of negative impact on economic growth and investment is one willing to tolerate? Regrettably, the recent presidential campaign featured much demagoguery but few answers. Buffett is no more illuminating.

The so-called Oracle of Omaha begins by making the manifestly absurd assertion that tax rates do not influence investment behavior. Astonishingly, he claims that when he was a fund manager, “never did anyone mention taxes as a reason to forgo an investment opportunity….” “Only in Grover Norquist’s imagination,” Buffett derisively contends, do investors adjust their plans based on the prospects for taxation. Such statements defy economic logic. The amount and nature of taxation, whether of the income stream generated by a particular investment, or that levied on interim dividends or capital gains realized upon the disposition of an asset, must be among the many complex factors considered by any rational investor in assessing the relative merits of an investment opportunity. If this proposition is not self-evident to you, you can go straight to the authority himself.

Buffett has left extensive and contemporaneous documentation of his investment thinking going back five decades. And it is clear not only that he has always understood this fundamental economic axiom, but that tax considerations have been a critical animating factor throughout his business career. (Indeed, during the period when he was initially accumulating great wealth, Buffett was quite passionate about the desirability of low tax rates.) As early as 1963, he wrote a letter to the investors in his hedge fund, The Buffett Partnership, Ltd., in which he laid out some of the fundamental tenets of his investment philosophy as it relates to taxation. One was the following:

“I am an outspoken advocate of paying large amounts of income taxes – at low rates.”

He goes on to note that in the real world not all investors share his approach: “A tremendous number of fuzzy, confused investment decisions are rationalized through so-called ‘tax considerations.’” One would think this behavior has meaningful economic consequences in the aggregate. Buffett assures his partners that he is utterly disciplined and rational, though no less aware of the importance of taxation to investment results:

“My net worth is the market value of holdings less the tax payable upon sale. The liability is just as real as the assetunless the value of the asset declines (ouch), the asset is given away (no comment), or I die with it….Investment decisions should be made on the basis of the most probable compounding of after-tax net worth with minimum risk.” [emphasis added]

That oblique reference to giving assets away is highly revealing, and we’ll return to it in a minute. Scarcely a year later, the emerging star fund manager reported to his investors that the Buffett Partnership had sold some investments and thus would incur taxable realized gains (the quaint sum of $2,826,248.76 in total, as it turned out). But he assured them that virtually all of his gains qualified for long term tax treatment. “We make investment decisions based on our evaluation of the most profitable combination of probabilities. If this means paying taxes – fine – I’m glad the rates on long-term capital gains are as low as they are.” [emphasis added]

Sensitivity to tax rates and structures, if not extensive efforts at tax minimization, has been a consistent focus for Buffett. In 1990, he shared with his stockholders the sample of a letter he had sent to a business owner whose company was a prospective acquisition target for Berkshire Hathaway. In it, Buffett explained to the potential seller why it was essential that the seller’s family retain a 20% interest in their business:

“We need 80% to consolidate earnings for tax purposes, which is a step important to us.”

One can only wonder, whether the deal would have happened, and at what price, if the seller had insisted on retaining 21% or more.

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It’s a little misleading to fail to point out that when Buffet made all these seemingly “shocking” statements, taxes were being paid at a much, MUCH higher rate, across the board, then they are now. That tiny little detail pretty much decimates this arguement.

Actually he is correct as a Fund Manager he would not make a decision based on taxes. The fund manager doesn’t pay them. The investor dies. One reason I left funds is I got tired of big tax bills when the fund value dropped. The tax bills being based on the fund manager decision to sell. Now that I do my own taxes are a huge consideration. I’ll keep something for a minimum of a year regardless of upward performance to avoids short term cap gains. Just like everything else the ‘bill’ gets passed down. Raise taxes on steel imports – the price of of refrigerators, cars, etc rise. Raise taxes on fuel – the price of food rises. It isn’t that hard to get but people like Buffet throw out choice words to misguide people into believing there is no downside to big government.

Mr.Buffett could write a check to the US treasury at any time for any additional amount he deemed necessary but doesn’t do so for the following Buffett Position on the tax-free foundations he established for his family members or contributes to via Bill Gates. “In a 2007 CNBC interview, when asked why he shelters his money through tax-free strategies rather than writing big checks to Uncle Sam, Mr. Buffett responded: “I think that on balance the Gates Foundation, my daughter’s foundation, my two sons’ foundations will do a better job with lower administrative costs and better selection of beneficiaries than the government.” So Mr. Buffett thinks he and his family can put their money to better use than the government can. I guess he’s really not so different from the rest of us who would rather direct our contributions to our own charitable institutions rather than passing them through high overhead government agencies.

I’m surprised – and a little disturbed – by the responses here. You all realize that when Buffet made all these statements, he was paying much higher taxes? And to the few of you who seem to think he believes the capital gains tax should NOT be raised, literally THIS WEEK he made the statement that he DOES believe it should be raised. He finds it outrageous that he pays 15% while his secratary pays 30% – and to those of you who seem to think he should figure out some random number to add to his taxes – that’s a ridiculous waste of time. He’s more concerned with fixing the foundational problem (the GOP has spent 30 years convincing their base that taxes are the government “stealing” from us rather than the price we pay to live in a functioning, free, first world society) than personally just paying more. Because really, what good would that do?

Some of you seem to have forgotten how we built the American middle class. Here’s a hint: it was NOT by this backwards, everyone-for-himself-and-screw-the-government-and-people-not-like-me, I’m-voting-agains-my-own-interests freak show that the GOP is currently spouting like nutsos.

Warren Buffet is the biggest scam artist ever. This guy has bought more companies and fired more employees to raise profits for his “investors” only to line his own pockets. His friend Bill Gates (another criminal who stole the operating system from the Seattle Computer Company for $50,000) is another scam artist. Why would I want to listen to anything this criminal Buffet has to say about taxes. Hey Buffet, if you are so adamant about rich people paying more taxes, why don’t you give $50 billion of your money to retire down some of the national debt. You won’t because you are full of hot air! Another lying scum bag.